My father passed away 12 years ago and we’ve just discovered his life insurance policy. But the company says it’s too late. What are our options?

A survey from LegalZoom highlighted that 72% of older Americans intend to leave an inheritance, but only 48% of them have a plan in place (1). What’s worse, 39% of younger Americans report not having had conversations with relatives about financial plans, such as inheritances. This will leave a lot of heirs in the dark about the assets that will be bequeathed when their parents or close relatives die.

Take Helen, for example. Her father passed away 12 years ago, and her mother, Bridget, didn’t know he had a life insurance policy at the time. When they were going over some papers, Helen found a letter from an insurance company at the time of her father’s death, saying that they would be sending a check for his coverage. Bridget admitted she didn’t believe she received it.

While the widow is apparently owed the money, a call to the insurance company revealed it’s too late to claim it. Helen wonders if they have any other recourse to claim the payment that her father intended them to receive.

Here’s what you need to know about unclaimed life insurance policy payouts, and how you can avoid a similar situation by communicating the details of your will before it’s too late.

The skinny on life insurance policies

When you buy a life insurance policy, you’re making a legal agreement with an insurance company to pay a certain amount to your beneficiaries if you die or are severely injured (2). When a policyholder dies, the beneficiary can make a claim with the insurance company, and once it's paid out, the policy ends. It’s also important to note that the policyholder must maintain the premium payments to keep the coverage in effect.

Life insurance can help cover the costs associated with the policyholder’s death, like medical bills or funeral expenses. The money can also be used for the beneficiary’s needs: their own living expenses, debts or even a large discretionary purchase.

According to data from Western & Southern Financial Group (3), about 51% of adults have some type of life insurance policy. Most have an individual plan (55%), while the remaining policyholders have employer-provided coverage or a mix of both.

When life insurance policies go unclaimed

If, like Helen and her mother, you haven’t filed a life insurance claim that you’re eligible for, the good news is that there’s no deadline for filing a claim (4). If you’re unsure of whether you’re owed a payout or don’t know which insurance company your loved one had a policy with, you can check with the National Association of Unclaimed Property Administrators, which has resources for each state where you can search for your unclaimed policy amount (5). The National Association of Insurance Commissioners also has a Policy Locator Service that you can use to search for any policies your loved ones may have had (6).

If Helen and her mother are unable to find information, they can open a new claim with her father’s insurer following these steps:

• Find the policy information, either through documentation or by asking the insurer.
• Gather the required documentation to complete the insurer’s claim form.
• Opt to choose a lump sum payment or an annuity for the policy.
• Then submit the claim. There may be a delay while the insurer investigates it, but they should follow up as needed.

Talk about your will with family

It’s important to prepare your loved ones for the end of your life. That includes discussing your will, the distribution of your estate and any insurance that family members will benefit from. While these conversations may be uncomfortable, focus on planning as a form of kindness to your loved ones, helping them to avoid the financial burden of your death.

If you’re unsure how to prepare, speaking to your lawyer, estate planner or financial advisor can help make the conversations easier, ensuring that you’re making the right decisions for your family.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Legal Zoom (1); Forbes (2); Western and Southern (3); Progressive (4); National Association of Unclaimed Property Administrators (5); Policy Locator Service (6).